A measure of volatility on Wall Street on Monday rose to its highest level in more than 5 months as U.S. equity benchmarks dipped and as the yield in a benchmark Treasury note climbed to its highest level in more than three years. The CBOE Volatility Index was up 16% at 12.12, marking its highest level since Aug. 18, 2017, according to FactSet data. The VIX uses bullish and bearish option bets on the S&P 500 index to reflect expected volatility over the coming 30 days, and it typically rises as stocks fall. However, the gauge, sometimes referred to as the fear index, has been abnormally low, trading below its historical average at around 20. To be sure, it is still holding at a level below that historic mean but its recent pick up suggests that investors are betting that volatility will accelerate over the coming days and months. A rise in 10-year Treasury note yield above 2.71% also has drawn attention, because rising rates can undercut appetite for stocks if government paper offer richer yields than risk assets like stocks. Rising yields, President Donald Trump’s State of the Union speech on Tuesday, the Federal Reserve’s updated policy statement on Wednesday and a bevy of earnings set to be released throughout the week could induce choppy trade in an otherwise subdued market. The three main equity benchmarks were under pressure Monday afternoon, with the Dow Jones Industrial Average off 100 points, or 0.4%, at 26,517, while the S&P 500 index retreated by 0.4% at 2,862. The technology-laden Nasdaq Composite Index , sometimes viewed as a proxy for risk appetite, was trading 0.3% lower at 7,483. That said, the uptrend for stocks remains intact with all three benchmarks looking at a monthly return of more than 7%.
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